Friday, January 22, 2010

"Moral Hazards"

When the whole "US Government will backstop Wall Steet" thing happened, all everyone could talk about was "Moral Hazard".

In short, Moral Hazard posits that if the government bails them out this time, then it increases the odds that the Banksters will make even more risky bets in the future, betting on yet another bailout.

What a wonderful mis-direction this is!

"Be careful! Doing this could cause the entire financial system to collapse next time."


Again, what a wonderful mis-direction! In essense, its saying, "Well, ok, this time, but not again." Don't punish anyone now, just make sure it doesn't happen again [sound of wrist being slapped].


It's not a "Moral Hazard" for the future, it is a complete breakdown of morals right now!

Principal: "Ms. Smith, your son has been setting fires in the classrooms and has caused the school to burn down."

Ms. Smith: "Oh, goodness! We should do something about this. One day he could wind up burning down the entire school!"

Principal: "Yes, Ms. Smith. That's very precient of you. He could burn down the school [again]. But in the meantime, WOULD YOU PLEASE STOP GIVING HIM MATCHES!?!?!"

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